Monday, September 16, 2019

Dealing with COLA, FONL, and Compliance

With our first anniversary (and party) coming up, I wanted to write a post on one of the many areas I didn't know anything about as a homebrewer that goes into an event like this. One of my many hats at Sapwood Cellars is compliance. It is a necessary part of the dream job, but luckily not the whole thing! It includes things like record keeping, filing excise taxes, and TTB submissions for formula and label approvals. The taxes took awhile to get used to, but aren't that bad now that we have adequate record keeping procedures in place.

We're lucky to be in that Maryland doesn't require federal COLA label approval for in-state distribution. So we're just now getting into that as we've recently been approved to sell beer in Virginia, DC, California, and Oregon. Don't get your hopes up, for now it's just small shipments for festivals and events (e.g., Modern Times Festival of Dankness, Aslin Anniversary Party, Snallygaster). So far it hasn't been too burdensome, mostly just getting the templates for our labels and keg collars in spec, and then learning what words are required or problematic. It is a bit more work given the wide variety of beers we produce (more than 150 in our first year), but most of those are tasting room only.



The more annoying piece is formula approvals (FONL). Despite what several brewers have told me, formula approvals are required any time you are adding ingredients not in the list of Exempt Ingredients and Processes regardless of whether label approval is required or where/if the beer will be distributed. I called the TTB and had my understanding confirmed. True, the odds of getting in trouble for not having an approved formula are low for a beer that stays in state (especially taproom only), but as a long-time government employee I'm just not an "ask for forgiveness" kind of person. The issue is that it seems approvals are really subjective/inconsistent.

Last fall I'd requested a formula with acorns, to do a small batch with the acorns I dry-fermented. I was rejected. Well that isn't entirely true, what the TTB usual responds is to request the GRAS (Generally Regarded as Safe) notification from the FDA for the ingredient in question. The issue is that they know well that the most ingredients aren't on there, and that the only way to get it there would be to fund a study showing its safety. As a result, most of "GRAS" substances are specific chemical compounds (e.g., Xylooligosaccharides from sugarcane, Ergothionine, and Synthetic dihydrocapsiate) that large companies have gotten through. You know what isn't on there? Apples, while apple peel powder is. Oranges, but orange pomace and enzyme-treated orange pomace is. You get the idea.



When I contacted the FDA about acorns they responded that while acorns were not GRAS, I could use "tannic acid extracted from nutgalls or excrescences that form on the young twigs of Quercus infectoria Oliver and related species of Quercus." Pass...

Recently I saw another brewer mention that they had gotten acorn flour approved (but were still requires submission of a "tannin leaching" process). I submitted a formula for a dark saison with acorn flour, and was rejected again, but this time for the reason that acorn flour is approved without a request being required. Not sure what grinding the acorns up does to change it from requiring FDA study to being allowed without even having to submit a formula request.

Something similar happened with Staghorn Sumac (which I'd used at home with wonderful results). GRAS notification was requested from my submission, which annoyed me because I've had several commercial beers brewed with. I responded:

Maybe I am misunderstanding the GRAS Notices? It doesn't seem to include most of the typical ingredients added to beer, e.g., hops or barley. Most of the entries are for chemical compounds or specific extractions from plants, not fruits, vegetables, or other commonly consumed foodstuffs? Rhus typhina (staghorn sumac) has been made into a lemonade-like drink for centuries. Here is an info sheet from North Dakota State on the species, that includes: "Food - Sumac lemonade made from berries."

Three weeks later and my formula was approved without further comment...

I've got nothing against safety rules on what goes into beer. I'd just prefer they were clearly delineated and widely followed.

Since both of these ingredients are foraged and thlimited, we decided to make 15 gallon variants with each for the anniversary party. A barrel-aged dark saison (based on Funky Dark #4) for the acorns and a pale sour fermented with The Yeast Bay Melange for the Sumac!



Tuesday, July 30, 2019

Craft Brewing Equipment, Reviewed

There are so many reviews of homebrewing gear online, but when it comes to craft brewing equipment you're lucky if you can find a forum post or two. It makes sense as there are so many more homebrewers than craft brewers... I also had more time to write before I started making beer 60+ hours a week. Now that we're a year into brewing at Sapwood Cellars, it seemed like a good time to step back and get my thoughts down about the equipment we purchased. Hopefully what follows will help a brewer starting out, looking to add something, or just wanting a sense of what things cost.

Forgeworks 10 bbl Brewhouse - $71,306

The Good: Reasonable price, solid build quality, gets the wort production job done.

The Bad: A few design head-scratchers on the mash tun. It has a huge volume below the false bottom (~90 gallons/3 bbl). The under-screen spray balls spray directly into the supports making them useless (the connection for them is also around back making it difficult to access). The torsion ring on the rakes wasn't adequately tightened when we received it causing the rakes fell off mid-mash a few batches in. No issues since properly tightening. Originally the pickup arm in the kettle extended into the center (right into the trub cone), but they swapped us our for a shorter one that is now standard.

Verdict: Satisfied with it so far, but not thrilled given things like having to pull the false bottom to clean underneath/between after the last brew of the week (the plates can be annoying to remove, but not bad compared to some other systems).

10 bbl Forgeworks Brewhouse

MidCo EC300 Burner - $1,070

The Good: Plenty of heat to have the kettle close to a boil by the time run-off is finished.

The Bad: The burner's control board is incredibly sensitive to moisture, just a few drops and it is fried. A fact that it would have been nice to have a warning about from Forgeworks (they said some breweries have had it happen multiple times). Otherwise it has just been a learning curve to wait longer to turn it on and throttle the gas to avoid boil-overs. Our beers are 1-2 SRM darker than predicted thanks to direct fire, but not really the burner's fault.

Verdict: Steam would have been great, but wasn't in our budget. We haven't had issues since covering the control board with a plastic baggie (we've got a spare controller too). We were told that MidCo had a waterproof housing almost complete last fall, but haven't heard an update since.

MidCo EC300 Burner

Thermaline Heat Exchanger - $4,198.72

The Good: Their website allow you to input the parameters (volume, desired chilling rate, ground water/glycol temperature) and they build a unit to accommodate. That seemed to work for us as the chill times seem to line up reasonably.

The Bad: Nothing major to complain about. In the summer we do have to slow run-off as the second stage (glycol) doesn't lower the temperature compared to ground water by more than a degree or two at full blast.

Verdict: Might have been worth it to go a bit more over-sized, but no issues with the build-quality, durability etc.

Thermaline Heat Exchanger

Apex 10/20 bbl Fermenters - $7,500/10,700

The Good: The price is reasonable. We've got the "new style" 10 bbls that have an easy-rotate racking. The 2 inch dumps at the bottom rarely get clogged with hops, and the 4 inch dry hop ports work well, especially with our hop doser (below).

The Bad: The 20 bbl tank is the "old style" meaning the racking arm is just a tri-clamp. Not ideal, but it works fine especially after switching to a Teflon gasket. The big issue on that tank is with the hop port, the literature said it was a 6 inch, but it turned out to be a DIN150 (European fitting). Apex had been aware of this for 6 months and it took me ordering a gasket (to confirm the size) and then a customer reducer to resolve the issue.

There is a minor issue with one of the 10 bbl fermenters as well, the sparyball arm is just a little short which makes reassembly a two person operation (one to push, one to clamp).

Verdict: Given the issues and poor service with the 20 bbl, I'm hesitant to order more tanks from them when the time for expansion comes. Especially as they don't manufacture the tanks, the only advantage of going with them rather than directly from a Chinese manufacturer would be service.

Apex 10/20 bbl Fermenters

Colorado Brewing Double Keg Washer - $6,370‬

The Good: Great price for an semi-automated keg washer. It rinses, washes, sanitizes, and purges two kegs at a time without intervention. As long as everything is connected and the reservoirs are filled, we rarely have an issue (other than hops in the occasional keg plugging up). The cycles are customizable, so we've tweaked them. We run a double cycle on our sour kegs, and no issues so far sharing them with clean beers.

The Bad: It's been a bit of a chore to deal with the issues that have arisen in one year of use: casters fell off, weld on one of the pots failed, software "disappeared", gas solenoid failed etc.

Verdict: The company has been great at dealing with these issues as they've occurred, shipping us replacement parts, paying for a welder etc. That said, I'd rather have not spent so much time dealing with it.

Colorado Brewing Double Keg Washer

Marks Mini-Hop Doser - $495

The Good: Allows us to add hops with minimal oxygen pick-up. Safer than dry hopping loose (no risk of foam-up). Ability to add hops to a tank without venting the head pressure.

The Bad: Nothing big, although expect to double the cost of the unit itself in fittings. We have 4 inch butterfly valves on our tanks and move the doser between them as needed.

Verdict: Not sure what we'd do without it... oh I do because we we're able to use it on our 20 bbl because of the wonky port size (run CO2 and hope you don't get a face full of beer).

Marks Mini-Hop Doser

Navien Tankless Water Heater Standard Model - $1,260

The Good: Outputs up to 180F, plenty hot for collecting water for the mash and sparge or pasteurizing a line. Relatively inexpensive to buy and operate compared to a traditional always-on HLT.

The Bad: In the winter 180F output runs at 3 gallons/min. Helps to have a tank with an electric element to speed things up, or pre-collect water the night before.

Verdict: At our scale, and without steam this made the most sense and we're still happy with it. Two units can be daisy-chained together if we want to speed things up (e.g., first heats to 140F, second to 180F).

Navien Tankless Water Heater Standard Model

Uline Straddle Stacker: Semi-Electric - $3,245

The Good: It's considerably less expensive than even a used propane-powered forklift. It's good in tight spaces because it's human powered, and powerful enough to lift a rack with two barrels. Being electric, it doesn't produce fumes that could negatively effect barrel-aging beers.

The Bad: Given the legs in front, it can't get around larger pallets, or standard pallets the long way.  It is propelled by pushing, and weights over 1,200 lbs (plus whatever you are moving up to 2,200 lbs more). Only one wheel turns with steering making direction changes difficult. It also needs additional height above it, which can be tricky in a building with HVAC, lights, doorways etc.

Verdict: With our relatively cramped space, a forklift doesn't make sense, this gets the job done.

Uline Straddle Stacker: Semi-Electric

FlexTanks - $460-$1,190

The Good: They are inexpensive compared to stainless steel totes, while being easier to use than IBCs (international bulk containers). They have standard 1.5" tri-clamp fittings and sample ports. We mainly use the 300 gallon ones to hold bulk sour beer waiting for barrels, or to dilute barrel-aged beer that is too oaky (especially with so many first-use barrels). The 80 gallon FlexTanks are for fruit additions, where the large opening makes them easier to fill and empty than a barrel.

The Bad: They can only take ~1 PSI, so most of the movement has to be from gravity. The gasket on the lids is round and doesn't have a grove to sit in. This makes it is difficult to align without dropping in.

Verdict: They were a good place to start thanks to the price, but stainless would be more versatile and foolproof if you have the money.

300 gallon FlexTank

EuroTransport Container Dimple Jacketed - $6,595

The Good: It's a movable, stainless-steel, temperature-controlled tank. We use it as our blending tank for sour barrel-aged beers. The bottom port is for liquid in/out (with a T for the sample port), and the two side ports for the temperature probe and carbonation stone. We currently have it off the pad, so it is nice to be able to pallet-jack it onto the pad for cleaning.

The Bad: It's odd that a jacketed tank doesn't have a built-in thermowell for the temperature probe. We use corny fittings for some kegs anyway, but it is weird to have a tank like this with a gas poppet on top. While the tank is jacketed, it isn't double walled so it sweats like crazy in the summer, we need to insulate it.

Verdict: Reasonably happy with it, but it requires a bit of a unique situation (like ours) to justify this over a standard brite tank.

EuroTransport Container Dimple Jacketed

XpressFill XF4500 - $6,295

The Good: It's a reasonable price for a four-head counter-pressure bottle filler. Does four bottles a minute when everything is humming along.

The Bad: We had some issues early on with the fill sensor. One or two heads would indicate that the bottle was filled even when it was empty. Turned out it was a drop of condensation on the CO2 line "falsely" completing the circuit. Not a problem now that we know what to do. One of the switches won't stay in the off position, which can cause the pneumatic foot to rise unexpectedly.

Verdict: I'm happy with it. Worth the added cost over a gravity filler for us because it reduces oxygen exposure, and allows us to bottle partially (or fully) carbonated beer. Our general approach is to chill the beer in the blending tank, prime with sugar and rehydrated yeast, agitate the tank, then pump in CO2 through the stone to get to ~1.5 volumes of CO2. The yeast does its job to bring the carbonation to target in the bottle, and we don't have to worry about predicting residual CO2 in barrels stored in ambient conditions.

XpressFill XF4500


Thursday, May 16, 2019

How to Win Untappd (or any Online Beer Rating)

Like it or not, online beer ratings have been one of the big drivers of craft beer over the last 20 years. As a brewery, you don't need to cater to them, but high scores can drive sales and excitement.

I spent a good deal of time on BeerAdvocate during my first few years of beer drinking (2005-2008). Reading other's reviews was beneficial for my palate and beer vocabulary. I reviewed a couple hundred beers, which gave me confidence to "review" my homebrew for this blog. However, there were aspects of trying to track down all the top beers that made it not entirely healthy. Whether it was fear of missing out on a new release, or the thrill of the catch outweighing the enjoyment of actually drinking the beer. I  find how many new beers there are now freeing, there is no way to try them all, so I don't try!

Untappd Logo

Now that Untappd is the dominant player I'll glance at reviews (especially for one of our new releases), but I don't rate. It's rare to see a review that has much insight into the beer. Even the negative ones are rarely constructive. As an aside, I find it a bit weird when people in the local beer industry rate our offerings. Generally they are kind, but it just seems strange to publicly review "competing" products.

For four or five years I maintained a spreadsheet to track the beers I drank and those I wanted to try. I weighted the beers not just on their average BeerAdvocate score, but on the score relative to their style. That's to say I was more interested in trying a Czech Pilsner rated 4.2 more than a DIPA at 4.3 because Pilsners generally have lower scores. If all you drink are the top rated beers, you'll be drinking mostly the same handful of styles from a small selection of breweries. Why is that though?

My homemade beer ranking spreadsheet

Whether it is the BeerAvocate Top 100, Rate Beer's Top 50, and Untappd's Top Beers they all show a similar bias towards strong adjunct stouts, DIPAs, and fruited sours. I don't think the collective beer rater score aligns with what the average beer drinker enjoys the most or drinks regularly. It is a result of a collection of factors that are inherent to the sort of hedonistic rating system.

So what makes beers and breweries score well?

Big/Accessible Flavors

People love assertive flavors. Once you've tried a few hundred (or thousand) beers, it is difficult to get a "wow" response from malt, hops, and yeast. This is especially true in a small sample or in close proximity to other beers (e.g., tasting flight, bottle share, festival). So many of the top beers don't taste like "beer" they taste like maple, coconut, bourbon, chocolate, coffee, cherries etc. If you say there is a flavor in the beer everyone wants to taste it... looking at reviews for our Vanillafort, it is amazing how divergent the experiences are. Despite a (to my palate) huge vanilla flavor (one bean per 5 gallons), some people don't taste it.

Vanillafort and vanilla beans

Sweetness is naturally pleasant. It's a flavor our palates evolved to prefer over sour/bitter because it is a sign of safe calories. That said, too much can also make a beer less drinkable. I enjoy samples of pastry stouts, but most of them don't call for a second pour. Balance between sweet-bitter or sweet-sour makes a beer that calls for another sip, and a second pour.

Even the most popular IPAs have gone from dry/bitter to sweet/fruity. They are beers that are less of an acquired taste. More enjoyable to a wider spectrum of drinkers. I'm amazed how many of the contractors, delivery drivers, and other non-beer nerds who visit the brewery mention that they are now into IPAs.

If you want a high brewery average, one approach is simply to not brew styles that have low average ratings. That said, for tap room sales it can really help to have at least one "accessible" beer on the menu. For us that has always been a low-bitterness wheat beer with a little yeast character, and a fruity hop aroma. Their scores drag our average down, but it is worth it for us.

Exclusivity

The easier a beer is to obtain, the more people will try it. The problem is that you don't want everyone rating your beer. To get high scores it helps to apply a pressure that causes only people who are excited about the beer to drink (and rate it). This can take a variety of forms, but the easiest is a small production paired with a high price-point and limited distribution. You can make the world's best sour beer, but if it is on the shelf for $3 a bottle at 100 liquor stores you'll get plenty of people sampling it that hate sour beers. Even with our relatively limited availability we get reviews like "My favorite sour beer ever!" 1.5 stars... The problem with averages is that a handful of really low scores have a big impact.

I'll be interested to see how our club-exclusive bottles of sour beer rate compared to the ones available to the general public. The people who joined self-identified as fans of ours and sour beers. My old homebrewing buddy Michael Thorpe has used clubs to huge success at Afterthought Brewing (around #20 on Untappd's Top Rated Breweries). In addition to directing his limited volume towards the right consumers, clubs allow him to brew the sorts of weird/esoteric (delicious) beers that might not work on a general audience (gin barrels, buckwheat, dandelions, paw paw etc.).

Jeff pitching Afterthought dregs


As noted above some styles have higher average reviews than others. Simply not brewing low-rated styles goes a long way towards ensuring a high overall brewery average. Anytime I feel like one of our beers is underappreciated, I go look at the sub-4 average of Hill Farmstead Mary, one of my favorite beers. Afterthought recently announced a new non-sour brand, which will prevent beer styles with lower averages from "dragging down" the average for Afterthought.

I remember there being debate over the minimum serving size for a review on BeerAdvocate. I think a few ounces of a maple-bacon-bourbon imperial stout is plenty. However for session beers, can you really judge a beer that is intended to be consumed in quantity based on a sip or two? We don't do sample flights at Sapwood Cellars. We sell half-pours for half the price of full pours. Not having a flight reduces people ordering beers they won't enjoy just to fill out a paddle. It also means that more people will give a beer a real chance, drinking 7 oz gives more time for your palate to adjust and for you to get a better feel for the balance and drinkability. What kills me is seeing people review one of our sessions beers based on a free "taste."

Another option is physical distance. Most trekking to Casey, De Garde, or Hill Farmstead are excited to be going there and ready to be impressed. It helps that all three brew world-class sour beers, but I'm not sure the ratings would be quite as good if they were located in an easily-accessible urban center.

The trick to getting to the Top Beer lists is that you need a lot of reviews to bring the weighted average up close to the average review. So having a barrier, but still brewing enough beer and being a big enough draw to get tens of thousands of check-ins and ratings. Organic growth helps, starting small, and generating enough excitement to bring people from far and wide. Lines (like those at Tree House) then help to keep up the exclusivity, not many people who hate hazy IPAs are going to wait in line for an hour to buy the new release - unless it is to trade.

My only visit to Tree House brewing

Shelf Stability/Control 

Many of the best rated beers are bulletproof. Big stouts and sours last well even when not handled or stored properly. This means that even someone drinking a bottle months or years after release is mostly assured a good experience. Most other styles really don't store well and are at their best fresh.

Conversely, hazy IPAs are one of the most delicate styles. I think it's funny that some brewers talk about hiding flaws in a NEIPA. While you sure don't need to have perfect fermentation control to make a great hop-bomb, they are not forgiving at all when it comes to packaging and oxygen pick-up. That's partly the reason that the best regarded brewers of the style retail most of the canned product themselves. Alchemist, Trillium, Tree House, Tired Hands, Hill Farmstead, Aslin, Over Half etc. all focus on direct-to-consumer sales. That ensures the beer doesn't sit on a truck or shelf for a large amount of time before a consumer gets it. Consumers seem to be more aware than they once were (especially for these beers) that freshness matters.

Trillium, Aslin, and Alchemist

Of course the margins are best when selling direct too, so any brewery that is able to sell cases out the door will. It can turn into a positive feedback loop, where the beer is purchased/consumed fresh which makes the beer drinker more likely to return. This worked well for Russian River, not bottling Pliny the Elder until there was enough demand that it won't sit on the shelf for more than a week.

Sure the actual packaging process (limiting dissolved oxygen) is important. But generally an OK job on a two-week-old can will win out over a great job on a two-month old can.

The ultimate is to have people drink draft at your brewery. That way you can control the freshness, serving temperature, glassware, atmosphere etc. That said, I notice the scores for our beers in growlers are usually higher than draft. I suspect that this is about self-selection, people who enjoyed the beer on draft are more likely to take a growler home and rate it well. It might also be a way for people to appear grateful to someone who brought a beer for them to try.

Reputation

This is one area where blind-judged beer competitions have a clear edge over general consumer ratings. When you know what you're drinking, that knowledge will change your perception. Partly it is subconscious, you give a break to a brewery that makes good beer. Or after a lot of effort to procure a bottle you don't want to feel like you wasted money/time. It can be more overt. I've had friends tell me that they'll skip entering a rating for our beer if it would be too low. I remember boosting the score of the first bottle of Cantillon St. Lamvinus I drank, it was so sour... but I didn't want to be that 22 year old who panned what people consider to be one of the best beers in the world.

I could also be cynical, but I can imagine someone buying a case of a new beer to trade and wanting to make sure they get good "value" by helping the score for the beer. Might be doubly true for a one-off beer with aging potential!

Sapwood Cellars has done pretty well in our first year. Out of more than 100 breweries in Maryland, we have the third-highest average score (4.06) on Untappd. That isn't even close to meaning that our beer is "better" than anyone below us though. In addition to being solid brewers, we're helped by our selection of styles (mostly IPAs and sours) and by selling almost all of our beer on premise. Hopefully that feeds a good reputation, which further drives scores as we continue to hone our process.

Rum, Apple, Apple tripel



Tuesday, April 23, 2019

Brewer's Emergency Kit

Whether you are a homebrewer or a craft brewer, things don't always go as expected or something breaks. If you aren't ready, it could cost you a batch or delay a brew. In the worst case scenario a company can go out of business, making a replacement part difficult and expensive to procure. More than once we haven't had a (seemingly) small inexpensive thing and it caused issues. Learn from us (and chime in with your own suggestions)!

Yeast

If you use liquid cultures, there is always a chance that your starter won't start or your brink will run dry. We always keep a couple bricks of dried yeast on hand. On a commercial scale, SafAle is ridiculously inexpensive ($50-75 for 500 g). We always have a brick of US-05 and S-04 in the cooler. The strains you keep will depend on what strains you use. If nothing else, we'll use them for primary fermentation on sour beers when we don't have enough liquid yeast harvested.

Being friendly with a few other local brewers could be handy as well, but there usually isn't a guarantee they'll have yeast to spare at the last minute.

Yeast/beer fridge.

Fermentables

I find it helpful to have both dextrose and maltodextrin on hand. We had a DIPA dry out a few points too far, easy enough to boil a pot of maltodextrin, keg it and shoot it into the brite tank to add .004/1P. Dextrose is handy if your gravity is lower by a few points, although in most cases we'll just leave the beer alone. Dried pale malt extract is another option, especially if your efficiency is inconsistent (or you often brew really strong beers).

It never hurts to order a few extra bags of a favorite malts either, especially for things like Golden Naked Oats that often seem to be out of stock. Extra base malt is nice too, especially early on when you're ordering ingredients for a few batches and still feeling out system efficiency.

Sacks of dextrose and maltodextrin.

Hops

Buying on the spot market means sometimes you get a bag that isn't all it should be. Better to have a few back-up options to swap in for dry hopping. Mediocre hops are usually fine in the boil, so if we open a bag of Simcoe that is so-so, we'll open another and save the first for a boil/whirlpool addition.

Fittings/Gaskets

We try to have at least one "extra" gasket in each size. This is especially true for things like manways that aren't generic. Unluckily we didn't think of this before the gasket on our 15 bbl DME fermentor stretched out... now they're out of business and we're still working to find a replacement. The one we have still works, but likely won't forever. If we order anything new, we get replacement seals and parts for it at the same time.

Same goes for having extra valves and other fittings that might leak or stop working. Delicate instruments like hydrometers, thermometers, refractometers never hurt to have redundancy either.

Gaskets of various shapes and sizes.

Controllers

Nothing is worse that electronics that don't want to work properly. Our MidCo burner for the kettle has a small control board that shorts if a few drops of water fall onto it. The first time was a complete surprise after washing down the kettle, but we ordered two replacements. That saved a batch of beer a few months later after a boil-over (our new gas meter really increased the heat output). No problems since adding a water-proof cover...

I've been meaning to buy a few extra solinoids for the glycol/tanks too as they are notorious for going bad.

Our MidCo burner.

Enzymes

When our most recent batch of saison stalled out we were ready for it, we added amyloglucosidase and the gravity dropped quickly to 1.001. There are other enzymes that you might consider as well that help with conversion, run-off, and clarity as well.

Enzyme

Gasses

While we have a bulk CO2 tank, we also have a few smaller tanks. They're necessary to pour at events, but they're also nice to have if the bulk tank runs empty and we need to keep pouring beer! Same story with nitrogen. We have two tanks so we have one in use and one filled (or waiting to be swapped).

20 lb CO2 cylinder compared to 750 lb bulk tank.

Your Suggestions

Rather than waiting for more things to go wrong to learn what else we should have, post a comment and let me know what to buy!

Monday, April 8, 2019

Dark Funky Saison - A Retrospective

Since 2008 my friend Alex and I have been brewing dark funky saisons. Each year we come up with a new concept, usually involving dried fruit and/or spices. We've been a bit lax the last couple years, the ninth iteration was brewed a year ago, and neither of us has bottled our share yet.

For my birthday a couple weeks ago, Alex came over to the brewery and we opened bottles of all the versions (including a few variants). I shot a video of our discussion, enjoy!




2009 Funky Dark Saison with Black Cardamom

2010 Fig Honey Anise Dark Saison

2011 American Farmhouse Currant Dark Saison

2012 Dark Saison with Quince Paste

2013 Cranberry Dark Saison

2014 Dark Saison Etrog

2016 Dark Saison Date and Pomegranate


Monday, March 4, 2019

The Economics of Opening a Brewery

The excitement over hazy/NE IPA is the best thing that has happened for local breweries in a long time. They are expensive to brew, difficult to package, a nightmare to distribute long distances, and get beer drinkers excited! When we put a juicy Double IPA on tap it flies. Our recent 7-barrel-yield of Snip Snap lasted less than three days, while an IPA might last three weeks, and a pale ale five. Having a beer that draws increases growler sales, and helps sell all of our other beers as people end up trying other similar beers when they come in.

Snip Snap DIPA

Here is a graph of the scores of 13 of our hoppy beers (pale ales, IPAs, and DIPAs) showing the Untappd score compared to the ABV. The formula for the trend line is y = 3.2008+.1392*x. That suggests if we brewed a 0% ABV hoppy beer it would score a 3.20 and to get a score of 5 would require 14.31% ABV. The R-squared value of the correlation is .71, so the most important factor in the consumer's opinion of our hoppy beers is strength (granted that typically comes with a higher dry hopping rate, sweetness etc.).

Impact of ABV vs. Untappd Score.

Driving business to your tasting room is job #1 for a small brewery because that is where the profit is highest. When you buy a beer at a bar or restaurant, most of the money goes to them rather than the brewery. While a ½ bbl keg of a pale ale might sell to a bar for $150-175 (a portion of which might go to a distributor), at even $5 pint the bar makes $620 in revenue. At our scale, it is almost impossible to make a profit only  selling beer at wholesale. It requires a tight reign on expenses with a premium price point, not to mention low overhead.

It is no coincidence that local brewery booms seem to follow when a state or city allows production breweries to serve/retail their own beer. In the case of Maryland this has created backlash from distributors, and a lesser extent bars and liquor stores who see more consumers cutting them out.

Sapwood Cellars Holiday Party

Ingredient Cost

We aren’t doing a great job controlling ingredient costs. We don’t reuse our yeast nearly as much as we "should" (3-4 batches per pitch), we pay as much as $35/lb for hops that are difficult to get on the spot market, we buy our malt pre-milled by the bag, we use expensive “real” ingredients for our variants (and usually don’t up-charge over the base beers) etc. That said, having a tasting room that is busy covers all of those sins.

Great Western Full Pint Malt

10 bbls – Pillowfort
$484 – 2-row
$137 – Malted Oats
$40 – Chit Malt
$50 – Milling Fee
$11 – Glucose
$.80 - Whirlfloc
$.06 - Zinc Sulfate Heptahydrate
$1 – Calcium Chloride
$1 – Gypsum
$.25 – Epsom Salt
$2.00 – 350 ml 75% Phosphoric Acid
$125 – Liquid yeast
$150 – Dry yeast
$77 – Columbus
$99 – Centennial
$396 – Citra
$264 – Azacca
~$100 – CO2/Gas/Electric/Chemicals
 ($1950/batch - $1.11/pour)

Let’s say we put more effort into yeast management and that gives us confidence to reuse the yeast for 20 batches. Bringing the proportional cost down from $125 to $25 per batch. The net savings to us would be $.05 per pour. What if we moved to a silo for 2-row, and cut our base malt cost down to a third and added a mill? $.14 per pour. That would make Pillowfort ~$.92/pour. Granted these recurring costs add up over the course of a year and both might yield improvements to the consistency and quality of our beer. But selling just one 1/2 bbl keg to a bar, even charging $250, loses us more money per batch then we’d save from making those moves. It also speaks to how important yield on these heavily dry-hopped beers is.

Most of our IPAs and DIPAs work out to $100-150 per ½ bbl keg. Self-distributing these beers for $200-250 there would be no way to make enough to cover rent, pay ourselves, and fund expansion. However, being a retailer of our own beers means we get $800-900 for that same keg sold by the glass and growler. It makes sense for us to charge a reasonable price ($7-8 for a 14 oz pour in a 17 oz glass) and have consumers return rather than charge a dollar or two more and end up having to self-distribute kegs (with the added effort).

When we do send kegs out, we try to get as much of a push out of it as we can (fests, tap-takeovers, beer dinners etc.). We don't pay for any traditional advertising, but we view the "losses" from self-distributing as a form of marketing. That also means not always sending beer to the same bars, as we want people to feel like they have to come to us to try our beers regularly.

Beer Festival

Most bars use a flat percentage markup to price their draft. If a beer costs twice as much for them to purchase, they’ll charge twice as much to the consumer. That means that they’ll make a much larger dollar-per-ounce profit on more expensive beers. The same isn’t true at most breweries, an IPA with Nelson Sauvin or Galaxy is easily twice as expensive as a session wheat beer (especially considering the lower yield with high dry-hop rates), but we don’t double the price. Still, charging $7 for IPA and $6 for the session wheat makes the IPA more profitable per pour. When you visit a brewery and buy beer, you’re allowing them to spend more money on the ingredients and make better beer. Not to mention that the brewery will care more about their beer and have better control over the product.

Overhead

After ingredient cost, our next biggest expense is rent. Scott and I debated where to open and toured spaces with a wide range of looks and costs. While a beautiful rustic plot with room for outdoor events and a small orchard was appealing… either running on a septic or paying hundreds of thousands of dollars for a municipal sewer connection was not. Conversely, opening in a vibrant downtown with plenty of foot traffic would have meant easier retail sales, but would have tripled our rent. Brewing is a space-intensive manufacturing business (especially with barrel aging), it is difficult for me to justify paying $30+ sq ft for the parts of the business that aren’t customer facing.

Lease Signing Day

If we are able to brew enough to outstrip tasting room demand, we’ll look into opening a small taproom someplace other than an industrial park. For the time being, our location is close enough to residential for the tasting room and inexpensive enough for 4,000 sq ft of production. Luckily the power of Google Maps, Untappd, and social media has been enough for us to draw people in.

In addition to the ability to sell beer by the glass, a tasting room opens up the way for merchandise sales, private events, packaged beer, and even food sales (working on that now). It has been essential for us to have a space and offerings that attract customers, even those who aren’t beer nerds. A fantastic staff, and enough of them working for short waits also improves the customer experience.

Salaries are the third big expense. Scott and I have done 100% of the brewing, tank cleaning, kegging, and keg washing up to this point. Financially speaking, our labor has been free, but we certainly could have kept our day jobs and paid less-per hour than our lost wages to hire brewers and cellar-people. That said, it didn’t seem right to trust something we’d worked so hard for to other people. As I learned from consulting, the people who are physically there have the biggest effect on the results. We’ll be looking to hire someone in the brewhouse soon, but we’re still trying to figure out what the role will be (cleaning and cellar duties, or someone who already has the skill-set to be a lead brewer eventually). We were willing to pay for front-of-house, as that is where we didn’t have experience (or the time to learn).

Other Income Streams

I posted about Brewery Clubs a few months ago. As a brewery that didn’t take on outside loans or investors, the extra money we brought in from club sales was essential. It gave us the breathing room to buy more expensive equipment, ingredients, not to mentions barrels for beers we won’t sell for months or years, and dump most of a batch that we didn’t love. Padding in the bank account helped with our sleep those first couple months too.

We’re now “paying” some of that money back. We made it through the club holiday events, for which we created 16 sixtels of variants that we didn’t sell a drop of. Not to mention paid employees to work (and at $15 an hour as tipping was light without tabs). Most of that cost was in our time, but we’ll continue to incur costs as we give bottles, decanter baskets (below), and events that club members paid for last year. Not only do we want to ensure that customers (and many friends) are happy they joined, we’d like to over-deliver so many consider re-upping for 2020!

Decanter Baskets

The rest of this year our biggest focus will be on packaging. Direct sales of canned and bottled beer should give us the chance to increase total revenue, but it will also lower our per-ounce revenue. While many people are willing to pay $8 for a 14 oz pour of DIPA... $5 for a 16 oz can of the same DIPA is about the top of the market. Cans have higher costs associated with them as well, both in terms of labor and materials (especially when you don't own a canning line). That really slims down the margins, and will dictate which beers are more likely to be canned (e.g., Pillowfort with Azacca rather than Snip Snap with Galaxy). The most important thing for us will be avoiding turning draft sales into can sales. Ideally cans are an add-on to tabs or an additional trip for a release rather than a replacement for draft consumption and growlers.

Shared Kingdom at Black Flag

What makes sense for a brewery will depend on the types of beer they brew and their goals as a company. If you want to be a large production brewery, it may make sense to start fighting for draft accounts early. We don’t have any resources dedicated to outside sales, in fact we turn down most offers to put our beer on tap. We’d rather have an excess of demand, and be in strong position rather than fight for a limited number of tap handles with an ever-increasing number of breweries.

Having the huge catalog of homebrew recipes between the two of us has been a big advantage too. On Saturday we tapped a scaled-up version of Atomic Apricot. The price difference on the apricot puree was particularly stark, $1.71 per pound at the commercial scale vs. $7.84 for the same product (Oregon Fruit/Vintners Harvest). I haven't been doing much homebrewing or test batch brewing so most of my social media posting has moved to the Sapwood Cellars Facebook and Twitter accounts (Scott does Instagram because I usually avoid posting from my phone).